Nearly half of enterprise firms lag in digital transformation

There’s no shortage of organizations claiming to have a digital transformation strategy. However, a recent study commissioned by telecommunication company CenturyLink indicates that nearly half of global enterprise companies are faced with multiple obstacles which hamper their digital transformation journey.

CenturyLink commissioned research firm 451 Research in to gather information for the global study of enterprise digital transformation through Web-based surveys and interviews of 1,402 decision makers from 12 countries across North American, Europe, and the Asia-Pacific region. The study was conducted from March to April this year.

The study is very useful for c-level leaders because it provides a window into the digital transformation challenges faced by organizations from various industries and how they are dealing with them. The study also provides some thoughtful recommendations on how enterprise companies can push forward their transformation programs.

Some of the key findings are:

51 per cent of enterprises have a formal digital transformation strategy

23 per cent are working on siloed digital projects but without an overarching strategy

19 per cent are still in the planning stages

7 per cent currently have no ongoing digital transformation strategy

In Canada, just over half (54 per cent) of respondents said they have a formal digital transformation strategy and are actively working change. That puts them ahead of their counterparts from countries like the United States, the United Kingdom, Australia, and Switzerland.

Executives from North America, Europe, and Asia Pacific told researchers they believe that disruption will continue to ramp up over the next three years. Forty-two per cent of respondents expects major disruption as the deployment of new digital technologies continues to play out in their respective fields.

“In a global economy that’s dominated by disruption, innovation and cyber threats, speed to market is of the essence,” said Bill Hurley, chief marketing officer for CenturyLink. “However, the complexities associated with digital transformation can result in numerous roadblocks.”

He said moving to a superior network and employing agile cloud technologies are keys to simplifying the transformation process.

Companies around the world are ramping up spending on digital technologies with the view of transforming their organization, according to an official of 451 Research.

“Digital transformation programs are now being viewed as strategic, long-term initiatives and typically receive the support of top-level executives,” said Sheryl Kingstone, director of customer experience and commerce at 451 Research, who authored the survey. “In fact, 60 per cent of enterprises are increasing their IT spending levels to achieve the significant benefits of digital transformation.”

Barriers to transformation

The respondents cited several key factors that stymie transformation efforts:

Inflexible IT systems and the need for agility – 35 per cent

Organizational silos and the need to uncouple legacy practices – 33 per cent

Risk and security, including the need for assured data custody – 31 per cent

Other significant barriers recognized by respondents were potential failure to secure sensitive data (30 per cent); lack of available funding, capital or budget (30 per cent); and challenges of getting multiple service providers/partners working together (27 per cent).

Growing in the cloud

The study also confirmed the growing importance of cloud services. On a scale of 1 to 10, 80 per cent of respondents ranked cloud’s importance at 7 or above, and 20 per cent gave it a 10. Additionally, enterprises with a mature digital transformation strategy ranked the importance of cloud services 15 per cent higher than companies in the early stages of a transformation.

Find the right partner

Among the critical factors for digital transformation, success is choosing the right partner, according to the study results. Forty-nine per cent of respondents said their organizations are using or expect to use an IT services (including telco services) partner in support of their digital transformation programs, and just under half (45 per cent) use or plan to use a cloud-service provider. Additionally, 92 per cent of companies surveyed stated a willingness to use a third-party transformation partner.

IT services and telecommunications service providers, in particular, are strongly preferred as partners, enabling and accelerating digital transformation programs for 52 per cent of companies with a formal strategy.

Recommendations

Researchers came back with several key lessons on how organizations can boost the digital transformation progress:

Customer experience continues to be a center of gravity for business competitiveness. From modernizing back-end customer database infrastructures and streamlining fulfillment processes to providing persona-based marketing, the way to win the hearts and minds (and wallets) of customers is through enhanced technology-enabled customer experience.

Excellence in customer service remains the mantra, and digital initiatives help remove friction points and provide channels for personalized engagement, as well as new ways to enhance customer satisfaction.

Have a variety of partners Researchers found three common aspects of business being transformed most often, namely: the way an organization uses data and business information, how it organizes and runs its business processes, and the technology platforms it uses to underpin its operations.

Entrusting some of the IT fundamentals to a partner and leveraging the cost/benefits of such a move stands as a critical element of the transformation roadmap. Data shows that enterprises are increasingly turning to third-party providers – managed IT partners and cloud specialists in particular – for services to support their digital transformation programs.

Build in security – layer by layer Organizations need multiple layers of network-based security. Security is not just about privacy concerns or protection against cyber threats, but about fundamentally securing company data throughout its lifecycle.

Have a cloud-enabled enterprise network Enterprises are increasingly relying on cloud infrastructure to improve scalability and utilization and to maximize these gains, organizations need to build industrial-strength into the underlying connectivity. Improved reliability of networks, systems, and infrastructure is the single biggest IT-led priority. As multiple clouds come into use, the need to connect at speed and without failure with more diverse and traditionally divided ecosystems becomes paramount.

About this author

Nestor is a Toronto-based journalist who specializes in writing about technology and business. He is the editor of Vanguard Magazine and the associate editor of IT in Canada and a regular contributor to CGE.